Standing Committee G

[Mr. Win Griffiths in the Chair]

Education Bill

Clause 39 - Determination of specified budgets of LEA

Stephen Timms: I welcome you back to the Chair, Mr. Griffiths.
 I beg to move amendment No. 206, in clause 39, page 25, line 4, after 'budget', insert 'for a financial year'. 
 This is a purely technical amendment to remedy a defect in the drafting. In clause 39, after the phrase ''LEA budget'' and ''schools budget'' in paragraphs (1) and (2) of subsection 45A there is the phrase ''for a financial year''. That phrase has been missed out after the expression ''individual schools budget'' in paragraph (3). Amendment No. 206 rectifies that omission, to bring paragraph (3) into line with the preceding two paragraphs. It also allows the reader to make sense of what is being referred to. 
 Amendment agreed to.

Graham Brady: I beg to move amendment No. 267, in clause 39, page 25, line 8, at end insert—
'( ) provide for information to be collected by the Secretary of State including the annual per capita revenue budget of each maintained school and specific elements of school funding relating to curriculum changes or other initiatives of the Secretary of State.'.
 I join the Minister in welcoming you back to the Chair, Mr. Griffiths. I am sure that you are as delighted to be with us as we are to have you as Chairman. 
 The amendment, like the previous Government amendment, is largely technical and is intended purely to remedy an oversight in the Bill as drafted. 
 The Government want to impose new requirements on local education authorities and schools seeking to take powers relating to a school's budget and to how LEAs choose to distribute the funds available to them among schools within their area. I hope that the Minister agrees that the proposal would improve the climate of knowledge and information available to parents and schools and inform Ministers of the reality of school funding. The amendment would allow a new power providing for information to be collected by the Secretary of State, including the annual per capita revenue budget of each maintained school, and specific elements of school funding relating to curriculum changes or other initiatives of the Secretary of State. 
 The Minister, who is a bright and able man, will already have sniffed out the motivation behind the amendment. He will have realised that there is considerable anxiety among hon. Members and in schools about the discrepancy between Ministers' 
 intentions to do good and to assist schools in their endeavours—as a generous man, I am prepared to accept their positive intentions—and what actually happens. There are two clear examples. First, there is the position of numerous former grant-maintained schools, which, as the Minister will know, were given a pledge when their grant maintained status was taken away in the School Standards and Framework Act 1998 that their funding would be protected and that the Government's intention was to level up the funding of other schools. That has not happened in practice and, however much Ministers tell me that education and schools expenditure has increased during the past four years, numerous schools in the country—indeed, in my constituency—currently have a smaller annual revenue budget than they had in 1997. As the Minister will understand, that is causing various difficulties. 
 Whenever I have raised those concerns with Ministers, sometimes through written questions, I have frequently been amazed at the lack of information that Ministers appear to have on the subject. One recent example that may be in the Minister's mind concerns schools with sixth forms after the new sixth form curriculum was introduced. Ministers rightly accepted that making such widespread changes to the curriculum would result in costs to schools, including for public examinations, and have staffing, resource and teaching material implications. They made available some money in the first and second years of implementation to cover the changed burden of cost that would fall upon them. However, as the Minister will know, if only from anecdotal evidence, the reality in much of the country is that the additional funds, earmarked by Ministers and said to be available for a specific purpose, were not passed on to schools. I suspect that the Minister has some sympathy with the bones of my point, given that the purpose of clause 39 is to deal with instances in which local education authorities do not deal properly with the schools that they fund. 
 By way of illustration, I will read the response that I received to a written question that I tabled in October. I asked the 
''Secretary of State for Education and Skills what estimate she has made of the number of schools with sixth forms which have received no funding from their local education authority for the new sixth form curriculum in each of the last two years.''
 The response, which came from the Under-Secretary, said: 
''No such estimate is available. Decisions on distribution were a matter for each local authority in the light of local priorities.''—[Official Report, 15 October 2001; Vol. 372, c. 992W.]
 There is simply no point in announcing that a sum of money is available to schools for a specific purpose if that money can be spent in any way whatsoever. It is dangerous if Ministers introduce important and far-sweeping changes, perhaps to the curriculum as in that example, but no funding is provided to schools for implementation. It is a serious problem that has affected the ability of schools to implement the curriculum changes and had a serious affect on wider budget planning and staffing situations for other year groups in maintained schools. 
 The Minister should at least be sympathetic to the amendment's objective. I hope that he will accept that it would make provision for his Department to be informed of the budgets for schools. 
 The amendment is not prescriptive: it would not oblige LEAs, schools forums or schools to disburse funds in a particular way. It would remedy a situation in which Ministers are apparently ignorant of what happens to schools' funding. I am sure that the Minister—an assiduous man—will assure me that he intends to do something about the black hole in the Government's knowledge of schools throughout the country, specifically the former grant maintained schools and changes in the sixth form curriculum. I hope that the Government will obtain that information and treat it as important in informing any decisions that might be taken under the wider powers provided by the clause.

Stephen Timms: I listened with interest to what the hon. Gentleman said about the amendment. I was surprised to hear that he believes that some schools in his constituency have a smaller revenue budget now than they did in 1997. I should be grateful if he would send me details of those schools. The amount paid to every local education authority for its schools has increased substantially over the past four years, and will increase significantly this year, next year and the year after. We have also successfully increased the proportion of those budgets that is delegated to schools. I will examine with great interest the information that the hon. Gentleman sends to me.
 In moving the amendment, the hon. Gentleman may not have taken account of our existing powers, for example, under section 52 of the School Standards and Framework Act 1998. The section 52 budget statement shows how much transitional funding is received by each former grant maintained school, so that information is already provided. Section 52 requires LEAs to produce annual budget and outturn statements containing such information as the Secretary of State may prescribe, and clause 42 of the Bill enables us to require schools to produce accounts containing such information as we may prescribe. 
 The extra funding for sixth forms was a local decision, but I can tell the hon. Gentleman that we have taken the amount we provided for sixth forms into account in determining the amount transferred to the learning and skills council for each area for 2002–03. That funding is clearly earmarked for sixth forms under the new arrangements. 
 In the light of what the hon. Gentleman said, I hope that he will welcome several elements of the Bill. I am sure that he would welcome the power of the Secretary of State to set a minimum schools' budget, which we will debate shortly. I hope that he would also welcome the introduction of the schools forums, which will provide a forum in every local education authority for discussion about budgets and other matters concerning the schools and the LEA. 
 Clause 42 would, in theory, enable us to require schools to provide details of funding they have received and expenditure that they have incurred in connection with specific initiatives. It would not be reasonable to do that; the Opposition have rightly raised some concerns about the work load in schools. It would be an enormous task if every school had to report the amount of money that it spent in relation to every curriculum change or every other initiative of the Secretary of State. I hope that on reflection the hon. Gentleman will agree that it would not be appropriate to impose that additional burden. 
 We have simplified the standards fund in a way that we estimate will save a great deal of time: 2.6 million hours a year across all the schools, or two and half weeks of someone's time in a typical school. We have significantly reduced the amount of paper that we now send to schools. We have made a pledge that 1,000 more trained bursars will be appointed during the lifetime of this Parliament. However, to impose an additional requirement of this magnitude would not be appropriate or helpful. 
 The Bill already includes powers to collect all the information that is necessary. I cannot agree with the hon. Gentleman that it would make sense to collect the detailed information that he has in mind. There is a principle that many of the detailed decisions about where funding should be allocated should appropriately be made at local level. That is the principle that informed many of the changes that we have made. Certainly, it underpins much of this part of the Bill. I think that the hon. Gentleman agrees with it, but it places a limit on the amount of prescription that should be imposed centrally about precisely how each element of funding is spent. I think that we have got the balance about right and I hope that the hon. Gentleman will agree.

Graham Brady: I am grateful to the Minister. His response has been helpful. He said that the burden that the amendment would place on schools would be too great, but he also alluded to the balance that must be struck. The balance is between the burden of reporting and administration and the new powers that the Minister seeks to take. If Ministers do not have detailed knowledge of what money is finding its way into schools, they will not be able to make informed judgments when exercising their new powers in the clauses to direct the activities of LEAs with regard to the schools' budget.

Stephen Timms: I just want to make a point that I perhaps should have made earlier. In clause 42 we are looking at the introduction of consistent financial reporting, which will allow us to benchmark in a way that has not been possible in the past, and to compare the amounts that are being spent in different schools on different things. I do not accept the hon. Gentleman's earlier description of a black hole.

Graham Brady: My description of a black hole applied to the existing situation and Ministers' apparent lack of knowledge about the money that is finding its way to schools. If the financial reporting requirements under clause 42 would give Ministers precisely the
 information that I seek for them in my amendment, it would give me considerable comfort.

Phil Willis: Is the hon. Gentleman arguing, as the Conservative party did at the last general election, that there should be a national per capita formula for all children in all schools that would clarify where the money comes from and where it goes. Does that remain the policy, and is that behind the amendment? If it is, there is a clear contradiction between what the Government want, what the Liberal Democrats want and what the Opposition want. Does he believe that, even in an LEA such as his own, there is a need for someone to determine that schools and children who are greatly disadvantaged in accessing the education system should receive more than those who have particular advantages, such as the students who go to the grammar schools in his area?

Graham Brady: I am wary of going too wide of the amendment, and we may have a constructive debate on another related amendment that my hon. Friends and I tabled. I will simply point out to the hon. Gentleman that if we had implemented a national funding formula for schools, it would have made provision for those from disadvantaged areas or backgrounds to attract a higher weighting. Therefore, the two points are in no way inconsistent. The hon. Gentleman would have had no worries about that issue under a Conservative Government, who sadly the nation are missing.

Phil Willis: I am enormously relieved.

Graham Brady: I know that the hon. Gentleman is relieved.
 The Minister's response to my amendment suggested that existing legislation requires that transitional funding should be reported. Part of the difficulty that arises is that transitional funding may be reported and Ministers may be aware of it. However, if they are not aware of the overall funding picture, they have only part of the information that they need to make a decision. 
 The Minister said that schools' funding for the sixth form curriculum would inform the LSC funding. Ministers have told me that they do not know what that funding is, and so I cannot see how the Minister can maintain that that information will inform the funding decisions for the learning and skills councils. I would be interested to hear how that funding has been decided. I understand that the baseline figure for the sixth form funding under the learning and skills council is based on last year's funding picture. However, some schools have received no new funding to take account of the increased responsibilities and activities necessary under the new sixth form curriculum. If last year's funding is taken as the baseline, Ministers will be locking in a pattern of underfunding for such schools. 
 There are real questions that need some answers. I may have sympathy with some of the objectives behind the clauses, but I am keen that Ministers should exercise them in a well-informed, responsible and transparent way. The clauses leave open the danger that Ministers may be forced to make decisions in the 
 dark according to criteria that are not public and that have not been debated or agreed outside ministerial offices. 
 The hon. Member for Harrogate and Knaresborough (Mr. Willis) asked me whether the intention behind my amendment was to introduce a national funding formula. It is not. My intention is simply to ensure that Ministers can obtain the necessary information if they are to exercise the powers responsibly. The Minister sought to reassure me that that information would be available. I hope that it will be. 
 I am grateful for the Minister's offer to examine figures from schools in my constituency. I will not detain the Committee with local matters but will provide the information for him. On balance, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Phil Willis: I beg to move amendment No. 219, in page 25, line 22, leave out—
'or the authority's schools forum'.
 We now come to contentious proposals and sensible amendments to overcome the problems. I think that the Minister accepts that it is difficult to debate amendment No. 219 without having first debated the make-up and purpose of the schools forums. Thus, if I stray into discussion of membership, it is only because it is important to consider it in discussing the amendment. 
 By including schools forums in the clause, the Government are trying to achieve what the Conservative party did not achieve in the last election. They are trying to bypass the autonomy of local authorities and respond to head teachers and governors in a way that suits their purpose. I agreed with many of the Minister's comments on the previous amendments, which were about reducing needless bureaucracy to do with accounting systems in schools and local authorities. The school standards fund is a good example: there has been a huge reduction in the work load. That was a good Government initiative. However, we now have a Government pledge to reduce bureaucracy by introducing a new layer of bureaucracy into the system. Fundamentally, that is what the measure will achieve. 
 I defy the Minister to name a single local authority in England or Wales that does not have reasonable or excellent consultation arrangements with its heads and governors. If we refer to Ofsted's examination of local authorities—I accept that it has not inspected all local authorities—or the Audit Commission, which supported the inspection of local authorities, we find that 75 per cent. of head teachers and governors are satisfied with the consultation that they have with their local authority. That is a remarkable achievement.

Chris Grayling: I am interested in the hon. Gentleman's comment. In broad terms, most governors and head teachers may be satisfied, but that is largely because the need for consultation is relatively limited in most of their lives. I assure him that many LEAs have a terrible record of consultation
 in cases where there are major developments; for example, the London borough of Merton, with which I have been involved for the past four years, announced that schools were due to be closed as part of a reorganisation plan at a meeting of heads of all schools in the borough. It did not even take the trouble to talk to heads of schools individually. The overall figures to which the hon. Gentleman referred mask some seriously bad practice.

Phil Willis: I am grateful for the hon. Gentleman's comment, because I did not stress that every local authority, school or business is not perfect; that is obvious. The inspections by Ofsted and the Audit Commission made it clear that there is much cause for concern in a small number of authorities. The answer is not to create a new layer of bureaucracy but to sort out the problem. Giving every local authority a duty in legislation to consult heads and governors about x, y and z is perfectly reasonable. However, going to the nth degree by creating schools forums, for which I can find no justification from anyone, is overcooking the egg, if hon. Members will pardon the expression.
 The amendment is designed to make the Committee consider a key issue for which the new schools forums will have responsibility or a responsibility. In proposed new section 45A(4)(c) of the 1998 Act, one duty is to 
''enable any prescribed determination—''
 on school budgets— 
''to be made by the Secretary of State or the authority's schools forum.''
 However, the regulations do not say that. Nothing in them makes that clear, yet the Bill clearly states that the schools forum can have responsibility for determining the budget. 
 Let us consider the make-up of the schools forum. Not every school will be represented. Even in the largest authorities such as mine, out of, say, 350 schools—many big metropolitan boroughs have that many schools or more—50 is the maximum number that can be represented. A quarter of places can be reserved for members other than schools, which leaves about 38. Two places are reserved for special schools, which takes the number down to 36. Those places are divided up according to the number of pupils in each school—primary, middle, secondary or special—which then get a number of places determined by the number of youngsters in the sector. The formula to assemble 36 head teachers or governors to represent those schools is complicated and bureaucratic. 
 Before the Minister contradicts me, I accept that that group of people will not make the determination in all circumstances, as the Secretary of State will not intervene in all circumstances. However, if those 50 people have the responsibility, as the Bill says, how will they make the decision? 
 The first responsibility of every governor and head teacher whom I have met is to their school. I have often argued to governors that we should consider our family of schools and how we distribute resources only 
 to be given short shrift by the chairman, who says that they are elected to look after their school and no one else's. When people go to the forum to debate these issues, their main responsibilities and liabilities will lie very much with their own organisations. What is to prevent a group of them in the forum from getting together to carve things up on their behalf? 
 The amendment would eliminate the role of schools forums in determining the level of schools' budgets at individual school level. It would mean that forums could advise on individual budgets, but could not have an authoritarian mandatory role. I hope that the Minister will see the sense in that reasonable request and respond to it in his usual positive and supportive way.

Andrew Turner: Happy new year, Mr. Griffiths. I apologise for my absence this morning.
 I have seldom heard such common sense from a Liberal Democrat, but on this occasion, there was a modest amount of common sense in what the hon. Member for Harrogate and Knaresborough said.

Phil Willis: I was really good this morning.

Andrew Turner: Speak for yourself.
 It is made more difficult because the Government have not yet published the draft regulations—[Interruption.] Sorry, I understand that they have been published, but I have not yet had a chance to read those draft regulations on the composition of schools forums that the Government have so kindly provided. However, I want to support the hon. Member for Harrogate and Knaresborough. 
 It is difficult to envisage how a school can be both effectively governed by governors and involved in decisions at the executive level about the distribution of resources. It is also difficult to understand why the power is necessary for many local authorities. I agree with my hon. Friend the Member for Epsom and Ewell (Chris Grayling) that some are defective in respect of consultation with governors and head teachers. On the whole, however, local authorities are quite good at such consultation. The difficulty arises for a minority, which might not contribute the right amount, might lack the capacity for effective organisation of the education service or might not have the political will to take effective decisions in consultation with governors and head teachers. 
 What is the need for this power given to governors and head teachers collectively and what will be its consequences? In some circumstances, a majority on the schools forum could get together to outvote a minority. Surely it would be fairer for elected local authority representatives to take the difficult decisions between the majority and the minority. Is the process necessary for all local education authorities? In excluding the common council of the City of London and the council of the Isles of Scilly, the Government have already accepted that it is not necessary for all. 
 What should be the threshold? For the Government, it is one school. Why should an authority such as Rutland, with a small number of 
 schools, be governed by an arrangement in which a school instead of a local authority can take a decision?

Chris Grayling: A further point arises. One important issue seldom properly addressed is cross-border educational planning. More commonality of issue often arises with schools just across LEA borders than with schools on different sides of the same educational area. If the Minister is going to impose mechanisms, should he not provide for cross-border dialogue as well?

Andrew Turner: I have considerable sympathy with that view, especially when a border is artificial. Some borders are clear and defined; others—particularly in south London—have huge cross-border flows. About a third of the London borough of Southwark's secondary population is educated outside the borough and about a quarter of Lambeth's secondary population is educated within Southwark. Some local authorities differ about whether sixth forms are located within their areas. Oxfordshire has an interesting history in that respect: some parts have a three-tier system, others a two-tier one. The interests of middle schools would not necessarily be recognised by the majority of schools in particular areas.
 The Government have taken insufficient account of those issues in drafting the amendment. Even accepting the principle—and I am unsure that I do—that local authorities should be overridden, we must ask more about the detail.

Stephen Timms: I can give the hon. Members for Harrogate and Knaresborough and for Isle of Wight (Mr. Turner) some assurances on their concerns. We all agree that schools should be consulted on financial matters. The National Association of Head Teachers certainly believes that there is a problem here. It recently carried out a survey of consultation arrangements, which concluded that a significant proportion of heads were dissatisfied with the consultation on financial matters. The sunny picture painted by the hon. Member for Harrogate and Knaresborough is not the experience of head teachers.

Phil Willis: The Minister and his Department spend millions commissioning Ofsted and the Audit Commission to carry out this work, and the Minister now quotes in defence the National Association of Head Teachers' survey. I find that ludicrous.

Stephen Timms: We take notice of evidence wherever it arises. The important organisation to which I referred believes that there is a problem. The hon. Gentleman argued that no one envisages any problem, but that is not the case. We all support consultation with schools on financial matters and the provisions provide the mechanism to introduce it.
 Schools forums are not new in principle: some authorities already have fine consultative arrangements, but we want all schools to benefit from that approach. Good practice benefits all schools. When we reach clause 41, my hon. Friend the Under-Secretary will set out the detail of our approach to schools forums. Presently, I disagree with the suggestion of the hon. Member for Harrogate and Knaresborough that it is acceptable for bodies to comprise more than 50 people. As my hon. Friend will 
 explain more fully, it is appropriate to set a maximum size for the schools forums. 
 We want the forums to play a significant part in local funding arrangements for schools. We want them to have mainly, but not entirely, an advisory role. The size of the school's budget and the nature of most centrally retained expenditure items will remain decisions for the LEA to take. The schools forums will not have a role in determining the overall size of the authority's schools budget, still less the size of an individual school's budget share. That should provide an important element of reassurance about the concerns expressed by the hon. Members for Harrogate and Knaresborough and for Isle of Wight. Many spending decisions—determining priorities for the use of the overall delegated budget, for example—remain for individual schools to take. However, with respect to the advantages of delegation or central retention, only a limited range of items should be decided collectively through the forum. 
 I am in the happy position this afternoon of having distributed the draft regulations. I am not always in such a happy position, but I am now. In fact, two sets of draft regulations relating to schools forums have been circulated. Not every member of the Committee may have read to the end of both. The heading of schedule 1 is ''Regulation X: classes or descriptions of planned expenditure which may be deducted from the schools budget of a local education authority''. 
 In other words, it is a list of things that the LEA can retain centrally. We propose to add four new items to that list, which is set out in regulations: school meals for primary and special schools, library services for those schools, museum services, and licences and subscriptions. As a result, the forum will be able to decide whether those four items should be delegated to each school. That is the extent of the decision-making powers that we propose should be conferred on the schools forums. It is a much narrower decision-making power than hon. Members suspected.

Phil Willis: Can the Minister confirm that there would have to be a resolution under affirmative procedure in both Houses to extend those powers and to include other items?

Stephen Timms: I cannot confirm that. However, it would require new regulations, not those that have been circulated to the Committee and, as the hon. Gentleman knows, those would be dealt with in the normal way.

Chris Grayling: Just to clarify that, the Secretary of State would have the right under the legislation to assign broad-ranging powers to an education forum without coming back to Parliament, and to re-deploy many of the LEAs' supervisory functions to the schools forums.

Stephen Timms: The Secretary of State has the power to propose new regulations that would be published and consulted on in the normal way and, as we have discussed several times, if hon. Members have concerns about those regulations, we would consider any request for a debate. That is the appropriate way
 to handle such a change to the proposed list. The decision-making power is restricted and is consistent with the character of the proposed schools forums.
 Schools can already opt individually for delegation on school meals. The schools forum is in the best position to judge whether schools can benefit from further delegation, and the decision to delegate should be left to it. This is a modest exercise that allows schools under each LEA to have a greater say in their affairs. I hope that hon. Members will recognise that the move is helpful, sensible and welcome. I hope that the hon. Member for Harrogate and Knaresborough will withdraw his amendment.

Phil Willis: I am not satisfied with the Minister's response. I fully intend to press the amendment to a Division. I do not have huge difficulties with what the Minister is trying to achieve, but I object to the ham-fisted way in which he is going about it. The final insult was the response to my question about whether the forum could have extended powers. The Minister said that it would not require primary legislation, but could be done by regulation. Yet again, another aspect of the Bill leaves hidden powers. As I have said before, the Minister's assurance that we can pray in aid against the regulations and have a debate on them is a hollow gesture. Whether there is a debate, when it will take place and how much time will be devoted to it is entirely in the Minister's gift. It is totally different from the scrutiny of a Standing Committee and a resolution of both Houses of Parliament.
 I do not belittle the survey by the National Association of Head Teachers. It is right to highlight what it sees as difficulties. However, if a group of head teachers were put in a room together and asked whether they were satisfied with what the local authority was giving them, they would not be satisfied, even if the amount were doubled. The primary heads will say that the secondary heads get too much; the middle school heads will say that the primary heads get too much and so on. Their job is to argue for as much as they can. However, if those heads were asked whether they wanted a group of them to be selected and for them to decide for the rest, they would go ballistic. That is the last thing that they want. They can at least attack the elected members of the local authority. They could hardly start to attack each other. Nevertheless, I take the point. 
 The other issue with which the Minister has not come to terms is the introductory clauses in part 1, which were all about innovation and allowing LEAs and schools to innovate. This is not innovating at all. St. John Fisher, a brilliant Roman Catholic high school in my area, has its own school meals service, as does St. Aidans. They do so because they feel that it is the best way to deliver the sort of service that they want. That is what I call innovation. In the north Yorkshire dales, however, where the primary schools mostly have fewer than 50 pupils, one would get a totally different response from head teachers if they were asked to make meals for their pupils. Yet the forum will make those decisions. 
 The Minister must recognise that when groups of heads are put together in the way envisaged, it will be recipe for dispute. The school that has invested heavily in its library is hardly likely to want to put its hand up to give more money to other schools for libraries. Things do not work like that. I am sad that the Minister sees it that way. Local authorities are undergoing a heart bypass here. We will tell these forums, whose powers can increase, that a Labour Minister is happy for an unelected group of people to make decisions about budgets. Labour Members should recognise that we are asking local authorities what is the point of them raising £388 million, as they did last year, to put into school budgets when they will not have authority over how it is spent. 
 We are going down a dangerous slope without justification. Yes, there should be consultation and local authorities should be made more accountable to their schools, although it is difficult to imagine how they could be made more accountable than at the moment, but the idea of a schools forum is one step too far. It is clearly an idea that was provided by the No. 10 policy unit and the Secretary of State is desperately trying to find a justification for it.

Stephen Timms: The hon. Gentleman said that he welcomes the idea of making LEAs more accountable to their schools, but that that is not possible. His perception is not shared by many schools. Schools generally will agree that it is helpful to increase the amount of consultation on financial matters. That is essentially the role that the forums will play.

Phil Willis: Consult, yes.

Stephen Timms: Consultation will constitute most of the forums' activity, but there will also be decision-making powers in restricted matters. It will be possible for the Secretary of State to promulgate new regulations in the future to extend that list, but I should make it clear that it would not be possible under this primary legislation to make regulations to allow the forums to determine the size of a school's budget or its individual budget share. That was the hon. Gentleman's central concern in moving the amendment, although we have moved on to other concerns, and I hope that I have addressed that first one.

Andrew Turner: Will the Minister give way?

Stephen Timms: I have finished.

Andrew Turner: I wanted to ask the Minister—he may speak again—what he meant when he said that the forum will not be able to determine a school's individual budget share. We understand that forums will not be able to decide that one school should receive X pounds more or Y pounds less, because that would be determining a school's individual budget share. However, the adjustment of the value of elements in the formula, or the introduction of additional elements, may have the consequence of changing a school's individual budget share. We know from local authorities that they sometimes introduce new elements with the intention of changing a school's individual budget share. If the Minister speaks again, that is one point on which I hope he will be able to help us.
 Perhaps this is for a later debate, but the Minister has not responded to my point about the effective representation of different kinds of secondary school. A local authority may have a two-tier system in the bulk of its area but a three-tier system in places where the middle schools are deemed to be secondary schools. The majority of secondary schools may be 11–18, but some will be 8–13 or 13–18 middle schools that are deemed to be secondary. The proposed system will put them all in one pot and call them secondary schools. However, it would be possible for middle schools not to be represented in the forum, even though it would be entitled to make decisions that affected their funding. 
 Similarly, a local authority area could contain only a few schools with sixth forms—Hampshire is an example. It would be possible for all the secondary representatives on the forum to represent schools without sixth forms, because the only definition included in the draft regulations is ''secondary schools''. The Minister would agree that such a forum would not be representative, so would it have the right to take the decisions that he is proposing in the clause?

Stephen Timms: The hon. Gentleman asked whether the forum could take decisions about the formula that is used for determining a school's individual budget share. The answer is no, and I refer him to the wording of new subsection (4)(a), which makes it clear that we are debating
''classes or descriptions of expenditure which are authorised or required to be deducted from an authority's schools budget''.
 In other words, we are talking about which parts are or are not delegated. That is the context within which we are debating the amendment, so the forum does not and cannot have the wider powers that he is concerned about. 
 When we get to clause 41, we will further debate the membership of schools forums, but I will say now that we expect that sensible decisions will be made to ensure that schools are properly represented on the forums. The hon. Gentleman may have noted in the last set of papers circulated to the Committee that we will issue guidance on school forums, which will include points on membership. That should reassure him.

Phil Willis: We have had a good debate, and the Minister satisfied one of our prime concerns. However, I think that he was just about to confirm that the cost of the exercise will come out of every school's budget. It will be a huge, bureaucratic exercise, and the costs will include providing meals for people at lunch times and travel and other expenses. The small primary school in north Yorkshire will have to find a share of that cost, whereas at present the LEA provides the service and pays for it from its retained element at no cost to the schools. The Minister shakes his head, but that is the reality.
 At present, the cost of the consultative processes that local authorities carry out—according to the Audit Commission and Ofsted, 75 per cent. of schools say that they do it well—comes out of the authorities' 
 retained share of the revenue support grant. Those costs will now be passed on. Sadly, Conservative Members do not see that as a major issue, but it is, so we will press the amendment to a vote.

Graham Brady: The official Opposition have considerable reservations about the schools forum model, and not least about the funding for schools forums, to which the hon. Gentleman alluded. That is covered in a later amendment that I have tabled.
 My initial reaction to the hon. Gentleman's amendment was that schools forums surely must have a function. I am slightly agnostic as to whether the amendment makes sense. However, having listened to his comments and to the intervention of my hon. Friend the Member for Isle of Wight, I do not think that the Minister has adequately explained why the provision is necessary. My hon. Friend asked about representation on the schools forums and possible imbalances between different types of schools, but the Minister did not clarify the point satisfactorily. Therefore, I am minded to urge my hon. Friends to support the hon. Member for Harrogate and Knaresborough if he presses the amendment to a vote. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 5, Noes 10.

Question accordingly negatived.

Phil Willis: I beg to move amendment No. 220, in page 25, line 23, leave out 'end of January' and insert '15th February'.

Win Griffiths: With this it will be convenient to take amendment No. 192, in page 25, line 23, after 'year', insert:
'or not more than 21 days after the publication of the teachers' pay settlement, whichever is the later,'.

Phil Willis: Having narrowly lost the argument on the previous amendment for the time being—we shall return to it on Report—I hope that I can persuade the Minister of the sense of this amendment. If he cannot accept it, I hope that he will at least think about it.
 The amendment would leave out 'end of January', which is the current deadline set by the Government, and insert '15th February'. Although allowing an extra two weeks might not seem terribly important, I hope to persuade the Minister that it is. The amendment would bring the timetable required for the so-called reserved power into line with the existing DTLR timetable for setting local authority budgets, which seems to be a reasonable proposition. The amendment would also allow the schools budget to be set after variables such as the teachers pay award and revenue support grant settlement are known. 
 One of the great bugbears for those of us who have been involved in local authorities, and for heads and governors of schools, is securing budget certainty as early as possible. I recognise that the present Government have tried hard to create certainty for schools, particularly in the three-year settlements. They have also recognised that schools need certainty about budgets in order to appoint staff and carry out initiatives. The amendment would provide a wonderful opportunity to enable some cross-departmental thinking on the setting of school budgets. 
 Local authorities are likely to have received their indicative RSG allocations before Christmas, and once they have, they undergo the traditional to-ing and fro-ing with the Department. Despite the Deputy Prime Minister's statement that no one would be listened to, that has not been the reality—thank goodness—and many local authorities, including my own, have made representations to the Department. This year, the Government accepted that there were some glaring errors in what was proposed, and local authorities eventually secured changes. It is not normally until mid-January that that process is completed. During that time there is a lot of to-ing and fro-ing as treasurers and elected members decide how to allocate the budget. 
 One of the most crucial tasks left to local government is the annual round of budgets, and hon. Members will know that a variation of about a quarter of 1 per cent. in one of the variables can make a significant difference in what is passed on to schools in their budget share. The teachers pay settlement is not known until the end of January or early February. I accept that that creates a difficulty: I would like the settlement to be resolved by the end of December of the previous year. It would be far more sensible to include the School Teachers Pay Review Board's recommendation—and the Government's reasons for supporting or denying its recommendation—in the final RSG so that everything could be wrapped up together. 
 Currently, the RSG is given and then there is some to-ing and fro-ing. After that, local authorities have to guess the outcome of the teachers' and the manual workers' pay settlement, although that has become slightly easier because of the single status agreement. At least a plethora of different organisations do not have to be managed at one time, but the situation is difficult and much of the information is not known until late January or early February. 
 It is nonsense to tell local authorities that they have a certain amount to spend and two weeks later to say, ''This is what the teachers' pay settlement will be. We have allocated 2.4 per cent for you, as last year, but we shall implement the teachers' pay settlement of 3.5 per cent.'' At that point, unless authorities have huge reserves to meet the additional pay settlement—schools often have greater reserves than the local authority, but I shall come to that later—they have to reduce the schools' budget share, which immediately affects schools. 
 I have given two reasons why the Government should accept at least the spirit of the amendment, and I accept that they will need to think about it. The third element is the involvement of the Learning and Skills Council. Most hon. Members' postbags will be full of letters from heads of schools with sixth forms, who say that they were given a real-terms funding guarantee for two years in respect of the LSC, but that they are not getting it. 
 Some authorities spent less than the £2,600 that the LSC gives, and it is starting to claw back that money from schools to make up the deficit. They were allocated only what they were spending. Schools with additional numbers of sixth formers—particularly because 2000, not 2001, was the baseline figure—that were spending £3,400 or £3,500 now have only £2,600 to spend, which is the new learning and skills element. I do not want to get into that debate, but it is an important factor in the final allocation to schools. The LSC has announced that it will be 2003–04, which will be its first full year with all its costs under control when it will be able to take some decisions, before it will give schools their allocations and local authorities the amounts that are being clawed back. That is an unholy mess. 
 With the amendment, the Government have an opportunity, instead of creating a mythical date at the end of January that does not meet any of the other requirements, to set a date at the end point when all the information is available to local authorities so that they can provide a school's budget. 
 I accept that if we went down the road suggested by the hon. Member for Altrincham and Sale, West everything could be decided from Sanctuary house or the No. 10 policy unit, and money could be allocated quite easily. Fortunately, however, the Minister is a decent chap, and the Secretary of State is even more decent. They assured the north of England conference on Friday that that is not their intention and that local authorities will continue to play a pivotal role, and I was delighted to hear the Secretary of State say that. I therefore ask the Government to use this opportunity to do something that everyone is crying out for. Every head and local authority in the land would support them in providing a reasonable timetable. I am sure that the Minister has found my case compelling and will respond accordingly.

Adrian Bailey: As this is the first time that I have spoken in a formal debate in this Committee, may I belatedly welcome you to the Chair, Mr. Griffiths? First I should declare a non-pecuniary interest. I am an honorary vice-chairman of the Local Government Association, an organisation that was often quoted on Second Reading. My views are totally my own. Indeed, I am not sure what the LGA's position is on this issue. I speak from the perspective of someone who was chair of finance of the large metropolitan authority of Sandwell between 1992 and 1997, and I am concerned about the clause. The amendment is well intentioned, but although it could solve some problems, it might create others. I should like to explore some of the issues with the Minister and seek some reassurances.
 The hon. Member for Harrogate and Knaresborough said, quite legitimately, that local authorities have great difficulty in determining the level not just of their education budget, but of other budgets, within the timetable outlined here. The provisional revenue support grant settlement is normally given in early December. There follows a detailed consideration within local authorities of how that should be allocated department by department on the basis of their figures. As the hon. Gentleman said, January is usually taken up with a procession of chairs of finance to the Minister making special pleading for their local authority budget. 
 Incidentally, there was a far greater problem for local authority finance chairs between 1992 and 1997. None the less, the ever increasing demands upon the services from local authorities do not mean that those budget problems have gone away. Detailed consideration still has to be made of how the annual budget increases are to be allocated by the local authorities. Following those submissions, budgets are occasionally altered, but the local authorities will not normally know that until the end of January. It would therefore be difficult for them, within the time scale outlined, here to make the necessary adjustments to their budget in time to give the Minister a definitive education budget. I should like to hear the Minister's perspective on that. 
 I can see a further problem in amendment No. 220. By leaving it as late as 15 February, one runs into the timetable determined for the settlement of the council tax and in effect the final putting to bed of the budget. If that determination were not made until 15 February and if it were necessary for the Government to intervene and alter the education budget, the local authority would be hard put to make the necessary adjustments in other departmental budgets prior to the concluding date for the budget process, so leaving it until 15 February would cause a problem. 
 The problem is not theoretical or hypothetical: one year my local authority had its budget altered by £500,000. Given that education comprised 60 per cent. of the total budget, we are talking about a £300,000 adjustment—a significant figure—in my local authority's budget. If this scenario applies when the local authority has to provide the Minister with figures—by the end of January—it would cause a significant variance. The £500,000 was a cut, where another year saw a slight improvement, but the key point is that many authorities face this scenario and the deadline could present them with real problems. If ministerial intervention were necessary, different problems might arise. Other adjustments would then have to be made to local authority budgets.

Phil Willis: The hon. Gentleman makes a powerful case. Does he agree that the January deadline means that local authorities have to determine the education aspects of the budget significantly ahead of the end of January, before the final RSG settlement is announced? Would not the whole local authority budget have to dance to the tune of the education budget and everything fall in line?

Adrian Bailey: I agree with the hon. Gentleman. Education usually comprises between 55 and 60 per
 cent. of a metropolitan authority's budget. It would have to be determined ahead of other budgets, although in practice local authorities might well try to determine the lot at the same time. Either way, the deadline—and, indeed, the 15 February deadline—presents problems. Any adjustments will impact on other departmental budgets.
 Will the Minister give an assurance that if adjustments to a local authority budget are made about the time that the figures for the education budget have to be provided, local authorities will not be penalised by any subsequent adjustment? The process must be flexible; otherwise it could make a serious impact on local authority budgets.

Graham Brady: I am pleased to follow the hon. Member for West Bromwich, West (Mr. Bailey) whose first contribution to our proceedings has been worth while and helpful to both sides of the Committee. I am sure that we can look forward to further well-informed contributions from him.
 Amendment No. 192 sits alongside amendment No. 220. Approaching the problem in a slightly different way should help shed light on some of the difficulties identified with amendment No. 220. That amendment was designed to replace one date set in stone with a more accommodating arrangement for local authorities in setting their budgets. The flaw is that it would have replaced one date set in stone with another, but I accept that the proposed date might have been more realistic. It was a genuine attempt to deal with the problem. 
 Amendment No. 192 is more flexible. It is designed not to fix a specific date, but to provide a minimum period following the settlement of teachers' pay, which must be known to the local authority and Ministers before such a determination can be made. In theory, the date 21 days after the publication of the teachers' pay settlement might fall before the end of January; that would allow Ministers to proceed according to their timetable. However, if the 21-day date falls after the end of January, the amendment would provide a little cushioning, which might allow some of the identified pitfalls to be avoided. In an earlier speech, possible relevant variables, other than the teachers' pay settlement, were identified. By fixing a degree of flexibility in the system, amendment No. 192 would go some way towards helping in that respect.

Phil Willis: May I try to help? The hon. Member for West Bromwich, West made a powerful contribution. He raised an issue that I considered when drafting the amendment and which I discussed with the Local Government Association. The problem with going later into February is that one falls foul of legislation that requires authorities to set their council tax. I have been told that 15 February is the latest one can go without falling foul of other legislation.

Graham Brady: I am grateful to the hon. Gentleman. As I have already made clear, I accept the principle of what he is trying to do. I hope that Ministers will reflect on the fact that both the official Opposition and the Liberal Democrats have tabled amendments that are driving towards the same point, and share the concerns raised by the hon. Member for West
 Bromwich, West. There are genuine problems with the Bill, and I hope that the Minister will reassure us that he has an alternative solution for tackling them.

Stephen Timms: Under the terms of the clause, we will ask local authorities to give us their proposed school budgets by the end of January. My hon. Friend the Member for West Bromwich, West rightly said that, in some circumstances, there will not be what he termed a definitive budget by the end of January; I accept that. Like him, I was responsible for some years for a local authority budget. I think that he will agree that there will certainly be a proposed schools budget by the end of January. That is what the clause asks for. In fact, it is a more generous timetable than is now in place.
 At present, we approach local authorities early in January and ask them to indicate whether they intend to passport the increase in the education budget. Our experience is that few authorities have difficulty getting that indication to the Department by the middle of January. As my hon. Friend and other members of the Committee know, local authorities prepare their budgets over a considerable period, and much of the work is done a good deal earlier than the dates that we are discussing. 
 Amendment No. 192 would mean that we would not normally receive information on a local authority's proposed schools budget until the end of February. Amendment No. 220 would make it somewhat earlier than that. However, I suggest that both dates would be too late for the process that is envisaged of setting a minimum budget for an authority's schools before the new financial year. That is the purpose of the measure, and we will debate it shortly. However, for local authorities to take into account the Secretary of State's intention, if she has one, to set up a minimum budget, they must be aware of it before the last date on which they can set their budget and council tax demands. The hon. Member for Harrogate and Knaresborough commented on the date for precepting authorities, which I understand is the end of February. The hon. Gentleman should therefore accept that the Secretary of State cannot receive the information less than a fortnight before the budget and council tax for that authority is fixed. 
 We are not asking LEAs to tell us how much the teachers' pay award will cost them and their schools. There may be some variation. The pay for other support staff in schools is often not set until well into the financial year, and that uncertainty is part of the system. It is crucial for the Secretary of State, in making her judgment, to know whether authorities are passing on to their schools the increase in resources that we have made available for the schools budget. The initial proposed figure is made before Christmas, typically at the end of November. It is not unreasonable to expect LEAs to declare their intentions by the end of January. I re-emphasise that we are talking about the proposed budget. It may not have gone to members for a final decision by the end of January, but there will be a proposal, on which the clause requires LEAs to report.

Graham Brady: The Minister is making a genuine attempt to deal with our concerns. We are clearly talking about a proposed budget that may not even have gone to elected members of the LEA at that point. Could the Secretary of State be making decisions based on a proposed budget that may bear little relation to the final agreed budget?

Stephen Timms: I do not think so. There may be subsequent variation, but those who have been involved in the processes would recognise that by the end of January most decisions are in place and the room for manoeuvre is limited, given the need to send out council tax bills and to give certainty to various parts of the organisation.

Phil Willis: The exchange has been good, and we have raised some important issues. However, I am not satisfied with what the Minister is saying. He is describing an unholy mess, and the clause will make it worse. The bottom line is that if the Minister examined his own records he would know that the anxieties to which he has often referred are not an issue. Passporting is a classic example. He knows that last year only eight LEAs—I think that it is only eight—failed to passport all their education money into the budget. Of those, seven spent significantly above the standard spending assessment.
 What the Government were trying to do in relation to the passporting regulations was nonsense, because the LEAs could have passported all the money but cut school budgets by 10 per cent. We must get real, rather than create mythical dragons that must be slain. Only one authority did not passport all the money, but spent less than the SSA, and it had just received a brilliant Ofsted report and a report from the Audit Commission that said that it was delivering—

Graham Brady: Which one?

Phil Willis: I prefer not to say, because that is not my point. Passporting is not the big issue that the Government and the Minister think it is, because that dragon has already been slain. That was not a Welsh accusation, by the way, Mr. Griffiths.
 We should abandon the idea of proposed and actual budgets. Schools need to know when the authority has completed its consultations, in which a school forum will now be involved. Once the consultations are concluded, the school requires to know the School Teachers Pay Review Board's recommendation. For most authorities, teachers' pay accounts for between 73 and 80 per cent. of the education budget. Once that amount is known, elected members can debate what the level of council tax will be and, ultimately, the level of resources allocated to schools. I prefer finality rather than lots of different processes. Authorities already have a process, as the hon. Member for West Bromwich, West pointed out, in which there is an elongated period of uncertainty between the provisional and the actual RSG. To extend that further would be unrealistic. 
 If the Minister will not agree to my proposals, despite the fact that the Local Government Association feel that my timetable is feasible and achievable, will he consider putting the STPRB conclusions back a month? That would allow local 
 authorities to have the STPRB results while they were debating their RSG. If they had that information, it would not matter whether the Minister wanted a draft or a final version by the end of January. 
 I shall not press the amendment to a Division, but the Minister should be realistic about the certainties that schools need and about his expectations of local authorities. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 39, as amended, ordered to stand part of the Bill.

Clause 40 - Power of Secretary of State to set

Graham Brady: I beg to move amendment No. 193, in page 25, line 38, leave out
'it appears to the Secretary of State that'
 and insert: 
', according to criteria prescribed by order under the affirmative resolution procedure,'.

Win Griffiths: With this it will be convenient to discuss the following: Amendment No. 269, in page 25, line 38, leave out
'it appears to the Secretary of State'
 and insert 
', according to a formula to be set out in regulations,'.
 Amendment No. 266, in page 25, line 38, after 'circumstances', insert: 
'having taken advice from the schools forum,'
. 
 Amendment No. 270, in page 25, line 44, at end insert: 
'(1A) Regulations under this section may also specify a formula to calculate the minimum per pupil funding for each category of school as a proportion of the schools budget for a given local education authority. Where the minimum funding level is not reached for a school or category of schools the Secretary of State may require that funding should be increased to that level as a condition under section 45A(4)(b)(ii).'

Graham Brady: This is a quartet of amendments, but more properly should be considered as two couplets, although I cast no doubt on the ordering of their selection.

Win Griffiths: As long as they are rhyming ones.

Graham Brady: You ask too much of me, Mr. Griffiths. I shall deal with the second couplet first. Amendment No. 266 is a probing amendment to establish what the Minister thinks about the role of the schools forum, and the scope of its activities and role in advisory matters. In particular, it would extend the advisory role of the schools forum beyond what Ministers have in mind, which they say will inform decisions taken by local authorities. It would require that, under new section 45B, if the Secretary of State exercised the power to set a minimum schools budget for the LEA, he, too, should have regard to the views of the schools forum. I do not wish to labour the point. Why should the schools forum have a valued role in advising the local education authority on budgetary measures if it does not have the competence to advise the Secretary
 of State on schools funding matters that relate to the locality?
 Amendment No. 270 was tabled to tantalise the hon. Member for Harrogate and Knaresborough, and he will be disappointed to know that it, too, is probing. It does not go anywhere near proposing the establishment of a national funding formula, which is what he would like, but it would set out a backstop on which schools could rely to provide a minimum share of the schools budget for each school or category of school. The way in which it would do that may not be close to Ministers' hearts. The Bill gives the Secretary of State unfettered discretion to decide on a minimum share, whereas the amendment would establish a formula by which a minimum budget share could be worked out. 
 I want to draw out the Minister's thinking on the overall level of the schools budget for an LEA area, and find out whether an important part of the ministerial decision-making process concerns the way in which that money is spent and divided between schools. Our earlier exchanges, which related to the timetabling for the decision-making process, might lead us to assume that he thinks that Ministers have an interest only in a global figure for a schools budget, but I want to draw out his thoughts a little further. 
 I now turn to the couplet that I suggested is more important. I am falling over myself to be helpful to Ministers and am offering them an à la carte menu. I am confident that they will accept the power of my argument that one or other of the amendments should be accepted. I leave it to them to decide which, and am happy to withdraw either if given appropriate assurances. 
 Amendment No. 193 is my preferred amendment. It would shift the definition of criteria for intervention away from the incredibly wide discretion that is allowed in new section 45B(1). The amendment would change that definition from what appears to be an entirely subjective decision-making process for the Secretary of State to fixed, transparent criteria that are agreed by affirmative resolution of the House. That would be not only of assistance to Ministers, who would not be in the invidious position of having to arrive at an entirely subjective decision on what might be a controversial matter, but of enormous benefit to local authorities. Instead of waiting for the Secretary of State to pronounce on whether their schools budget was adequate or inadequate, they would be able to consult using the clear published criteria, which would have been agreed following debate in this House. They would be able to ascertain Ministers' thinking, as they would be required to argue the case for their criteria. Local authorities would also be able to consult the regulations, and have certainty as to the likely treatment of a proposed budget settlement put to Ministers.

Andrew Turner: Does my hon. Friend not agree that such regulations or arrangements would save a huge amount of time for head teachers, governors and a whole host of the education community in many local education authorities? Without them, I am sure
 that there would be a temptation to lobby right hon. and hon. Members, Ministers and officials, to organise deputations to this place, and to spend a huge amount of money, time and effort coming to this place from distant parts of the kingdom. That would be overridden, perhaps by the Department, in due course. However, were there objective criteria to be consulted, that time and effort could be devoted to education.

Graham Brady: My hon. Friend makes a useful point. Not only would that help to avoid unnecessary burdens of bureaucracy on head teachers, local authorities and governing bodies, it might help to avoid unnecessary and pointless activity by Members of Parliament, who, under the Bill, could go to Ministers in the role of supplicant without knowing what criteria the Secretary of State had in mind. Therefore, they would not know whether they were wasting their time and that of their constituents, or whether they were giving false hope to schools, schools forums or other bodies in their constituencies. A more open, transparent process would improve, on every count, the outcome that Ministers want to achieve. It would assist the budget process of local authorities, and it would be helpful to all concerned if there were particular criteria by which Ministers would arrive at a judgment.
 I said that I was going to be helpful, and that I was offering Ministers a choice. Given that they loathe affirmative resolutions, do not like to be troubled to come to this House, and prefer to have untrammelled powers, I have also offered them a slightly lower hurdle over which to jump, in the form of amendment No. 269. It would play a similar role in establishing transparent regulations for those involved in the decision-making process, but would stop short of insisting on the affirmative resolution procedure. If Ministers accept that it is in everybody's interests that the criteria that are used to decide whether a school's budget is at an acceptable level should be readily available and clear to all concerned, but their stumbling block is that they do not want to have to come to this place to justify their views, and they do not want to be troubled with debate on them in all circumstances, they could opt for amendment No. 269. It would still provide for regulations to set out matters clearly, but would not require them to be approved by affirmative resolution. 
 I hope that the Minister accepts that it would be helpful in all stages of the decision-making process if the criteria used to make the judgment were available to all to be consulted on and not hidden behind closed doors in the Department for Education and Skills.

Stephen Timms: I shall first set out what the Government intend to achieve through the reserve power that the clause introduces. It is one of the most contentious aspects of the Bill, and there has been much debate about it outside the Committee. As we made clear, the new funding system for local authorities and schools that we shall introduce for the financial year 2003–04 will replace the current single spending assessment for education with a
 separate assessment for the schools budget and for the central budget of each local education authority. The schools figure will be announced publicly. Under existing local government finance legislation, we shall provide that each authority must make a clear and simple statement to its council tax payers of how its schools budget compares with its schools assessment.
 We are therefore relying principally on transparency in the new system to ensure that LEAs provide appropriate funding for their schools sector. However, our experience in recent years has been that although the great majority of LEAs have been willing to pass on annual increases in funding to their schools, a small minority have not, as the hon. Member for Harrogate and Knaresborough said. We do not want schools to face cuts instead of the funding increases for which the Government have provided, so we are establishing a reserve power under which my right hon. Friend the Secretary of State can, if necessary, set a minimum level for an authority's schools budget. We do not want to use the power, and I hope that we shall never have to use it. It will certainly be used rarely, if at all, but we would be failing our schools and pupils if we did not provide for the power as a back-up. 
 I shall respond first to the couplet of amendments Nos. 193 and 269. As the hon. Member for Altrincham and Sale, West hinted, they contradict each other, although he expressed that differently.

Phil Willis: The Minister made an important point about what he is attempting to do. I think that few of us would disagree with his intentions, but he has not committed himself to ensuring that, no matter where a local authority is located, it will receive a minimum entitlement. That is Liberal Democrat policy, so I am delighted that the hon. Member for Altrincham and Sale, West has come on board. The average primary education funding per pupil is £1,934. The minimum that some authorities receive is £1,551, and the maximum is £4,939. At secondary level, the minimum is £1,420, and the maximum is £5,157. The average is £2,483. Before the Minister can realise his vision and before he ever has to use his powers, that fundamental discrepancy between what students receive in one part of the country and what they get in another needs to be addressed.

Win Griffiths: Order. This is a long intervention. It is more like a speech.

Phil Willis: I have made my point.

Stephen Timms: The hon. Gentleman is asking me to describe the funding system that we will introduce for 2003–04. Of course, I am not in a position to do that today. However, we have made it clear that an element of the system will be an amount per pupil, which will apply throughout the country. We envisage that amount being increased when there are clear grounds to do so, such as circumstances in a local area that would incur additional costs and therefore warrant additional spending. By the sound of things, the hon. Gentleman will support the new system when we describe it in detail, which I hope to be able to do in the spring.

Chris Grayling: Before I make my substantive point, I draw the Minister's attention to the days when we
 were younger when the team to which the hon. Member for Harrogate and Knaresborough appears so attached were noted for dressing themselves all in white yet were known as the dirtiest players on the pitch. There could be an odd parallel.
 Will the Minister assure me that when he does the work that he mentioned, he will take account of significant regional differences in costs for schools, such as teaching and facilities costs? I am sure that the Minister is aware of my worries about costs in the south-east, and I want reassurance that that will be reflected in his work.

Stephen Timms: Yes, indeed. We intend to reflect in the new formula, when it is published, the significant additional costs that are incurred for reasons that the hon. Gentleman mentioned or because of other issues that arise in schools, such as pupils' needs.
 I turn to amendments Nos. 193 and 269. We set out in the explanatory notes some of the circumstances to which the Secretary of State will have regard when deciding whether she should set a minimum level of budget for schools in an authority. Page 18 of the notes mentions such circumstances as how a local education authority's proposed school budget compares with its school funding assessment, the performance of an LEA's schools, pressure from other services and the degree to which the authority fails to pass on increased funding that is provided for its schools. I accept entirely that local education authorities should know how they can avoid the risk of the Secretary of State setting a minimum schools budget. The answer to that is simple. Any authority that passes on the annual increase in its schools assessment to its schools budget may be certain that it will not risk the power being invoked.

Phil Willis: The Minister is saying that if an authority does not pass on the element that the Secretary of State gives for education, the Secretary of State may invoke these powers. If the authority spends more than its standard spending assessment, would the Secretary of State use the powers?

Stephen Timms: I did not say what the hon. Gentleman said that I said. I shall put it the right way round. An authority that passes on the annual increase in its school assessment to its schools budget will not be at risk of the power being invoked. However, the converse is not the case. The Secretary of State will not set a minimum budget for every authority that fails to pass on the increase in its assessment. On the contrary, we expect the power to be exercised very rarely. Before it is exercised, the Secretary of State must take account of all relevant circumstances.
 I have mentioned some circumstances that are referred to in the explanatory notes. That is not an exhaustive list. There may be other criteria that the Secretary of State should consider. The hon. Member for Altrincham and Sale, West commended to the Committee the virtues of having a fixed list—I think that that was his expression. However, I suggest that that is not the most helpful way to proceed in the interest of local authorities. If we listed every criterion through a formula in regulations or by some other device, at some point in the future we would find 
 something that had been omitted, which the Secretary of State would not be allowed to consider in making a judgment. It is in the interests of local authorities that that process should not be prescriptive. The list commended by the hon. Gentleman may not include an exceptional pressing local circumstance, which everyone agrees should be taken into account. The clause ensures that the Secretary of State will have the flexibility to take such matters into account, which he would not be able to do if the criteria were set in advance. 
 Under new section 45C(5), any order prescribing a minimum schools budget, which is set out clearly in the clause, will have to be set out in draft and approved by a resolution in the House of Commons. Any exercise of that power will be subject to parliamentary scrutiny. The existing wording requires the Secretary of State to take account of all circumstances so that she cannot leave any relevant ones out. The amendments would not be to the advantage of local authorities. 
 Amendment No. 266 would require the Secretary of State to take the schools forum's advice before determining a minimum amount for an authority's schools budget. The problem is the timing: a very tight window in early February when the matter must be decided by the Secretary of State. It is not possible to build into the process a formal consultation with every schools forum. A forum would still be able to reach an immediate view on the LEA's budget plans and communicate that view to the Secretary of State, but it would not make sense to build that into the process. 
 Amendment No. 270 would allow the Secretary of State to specify minimum per pupil funding for different categories of school. In the new funding system, the Government will be concerned with the split of funding between the schools budget and the LEA budget and, in this case, with the minimum size of the schools budget. The distribution of funding between schools should remain a matter for the LEA in consultation with its schools. The LEA is best placed to take that decision, which needs to be taken locally and in the light of local circumstances. Given those assurances, I hope that the hon. Member for Altrincham and Sale, West will withdraw his two couplets of amendments.

Graham Brady: I am grateful to the Minister for his remarks. As I indicated in my opening comments, amendments No. 266 and No. 270 were of a probing nature. I am somewhat satisfied with the Minister's assurances. I accept his point about amendment No. 266, which would create an unrealistic timetable for the Secretary of State, although it does clarify earlier points made about the difficulties that the timetable will create. I shall not press amendment No. 266 to a Division.
 On amendment No. 270, we received some interesting enlightenment from the Minister about the framing of the new schools funding arrangements, which shows that a division of funding between schools, or at least a minimum funding level, 
 features in the Government's thinking. I shall not press that amendment to a vote either. 
 Regarding the other amendments, I note that the hon. Member for Harrogate and Knaresborough complimented me on adopting Liberal Democrat policy—not something on which I have ever been congratulated before. Given his comments, I was surprised that he had not tabled amendments to what the Minister described as the most contentious clause of the Bill. I would be delighted if the hon. Gentleman were to support us when we press our amendments to a Division. 
 I said that I would be happy if the Minister were to give his blessing to either of the amendments. He said that the explanatory notes shed some light, but they are not binding in that instance. They cannot set out the criteria on which the Secretary of State will make any future judgment. The Minister also said that the powers would be used as reserve powers, and that he expects that they will be used infrequently. Neither we, nor schools, nor local authorities can rely on that. The Minister hardly reassures us when he says that the Government want this unlimited, unfettered power, but do not intend to use it. He cannot bind his successor or that of the Secretary of State. The powers can always be given wider use in future under the legislation. 
 The Minister went on to say that the use of the powers to direct schools' budgets would require a resolution of the House. That is welcome, but it does not deal adequately with the need for those bodies that will be affected by such an order to know in advance whether they will be subject to an order under the provisions. 
 Sadly, the Minister could not say whether members of the Government would be encouraged to support amendments Nos. 193 or 269. He leaves me with little option but to press both amendments to a vote to establish which one the Minister would like his hon. Friends to support. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 5, Noes 11.

Question accordingly negatived.

Graham Brady: By means of that Division, we have ascertained that the Government did not wish to support amendment No. 193. We have established what we want, and I shall not press amendment No. 269 to a vote.

Stephen Timms: I beg to move amendment No. 207, in page 25, line 40, leave out from 'year' to 'is' in line 41.

Win Griffiths: With this it will be convenient to take Government amendments Nos. 208 and 209.

Stephen Timms: This group of amendments addresses an embarrassing loophole in the clause, which would mean that if an LEA simply failed to provide notice, the Secretary of State could not proceed with setting the minimum schools budget. That is clearly not how the clause should work, and the amendments ensure that if the LEA does not provide the information, the Secretary of State can proceed in the way that is set out in amendment No. 208.

Chris Grayling: I want to make a point about the principle of the amendment. On several occasions, I have expressed to the Minister my disappointment that when Opposition Members, in good faith, have tabled amendments designed to tidy up the drafting of the Bill, the Government have determinedly resisted listening or making even the smallest modifications to improve the quality of the drafting, and the legislation, and to clear up apparent discrepancies. There is woolly drafting throughout the legislation.
 Therefore, it is altogether right that the Government should be unwilling to listen to contributions on drafting matters from Opposition Members but willing to come back and ask the Committee to make amendments to correct errors that they have made during the earlier parts of their work. I hope that, if the Committee accepts the Government's amendments in a spirit of understanding that when legislation is drafted, mistakes are inevitably made, then during the rest of the debate on the legislation the Minister will give sensible credence to, and be willing to support, Opposition amendments designed to improve the quality of the legislation.

Stephen Timms: The hon. Gentleman has, on several occasions, made unwarranted criticisms of the parliamentary draftsman who has worked on the legislation. He thinks that his proposals will improve the quality of the legislation, but I disagree.
 Amendment agreed to. 
 Amendments made: No. 208, in page 25, line 44, at end insert— 
'(1A) If at the end of January in any financial year a local education authority has failed to give the Secretary of State a notice under section 45A(5) in relation to their schools budget for the following financial year, the Secretary of State may, at any time after the end of that January, give the authority a notice under subsection (2) or (3). 
 (1B) In this section and section 45C ''the year under consideration'' means the financial year to which the notice under section 45A(5) relates or, in a case falling within subsection (1A), the financial year in relation to which such a notice ought to have been given.'.
 No. 209, in page 25, line 45, leave out from 'determining' to end of line 2 on page 26 and insert 
'the minimum amount of the authority's schools budget for the year under consideration'.—[Mr. Timms.]

Andrew Turner: I beg to move amendment No. 129, in page 26, line 12, after 'notice', insert
'and the opinion on the effect of the notice on their services of other Secretaries of State as appropriate. 
 ( ) ''the effect of the notice on their services of other Secretaries of State as appropriate'' in this clause means in England 
 (a) in respect of the effect on social services provision by the authority, the Secretary of State for Health; 
 (b) in respect of the effect on highways, transport, planning, economic development and housing provision by the authority, the Secretary of State for Transport, Local Government and the Regions; 
 (c) in respect of the effect on other services, such Secretary of State or Secretaries of State as the local education authority consider appropriate. 
 ( ) ''the effect of the notice on their services of other Secretaries of State as appropriate'' in this clause means in Wales in respect of the effect on any service, such persons as the National Assembly for Wales shall specify.'.
 This is neither a drafting nor a probing amendment. It is a very serious amendment. It seeks to make clear the consequence of the Government's intervention in the budget-making process of a local education authority. The Government have rightly proposed in new section 45B(4) that a notice must be made of the Secretary of State's reasons for amending the budget of a local education authority. But a local education authority does not operate in isolation, and neither does a local authority when it sets the budget for education. 
 As the hon. Member for West Bromwich, West implied earlier, the consequence of a change to a local education authority's budget is a change to the budget of the rest of the services provided by that local authority. The two proposed new subsections enable—indeed, require—appropriate Secretaries of State to make statements about the consequences of the inevitable reduction of the budgets that are provided for their services. If the education budget goes up, another budget must go down, and the amendment requires that the appropriate Secretary of State make a statement on the consequences for their budget.

Adrian Bailey: The hon. Gentleman's statement about the increase in the education budget having the inevitable consequence of other budgets going down is not necessarily correct. If capping were abolished, it would be possible to sustain other budgets.

Andrew Turner: I shall have to think about that intervention. Judging by the impression on the Minister's face, he will have to think about it too. Whether or not the consequences will be as I have described, the fact is that such action will have consequences. I accept that the Minister has a particular interest in the education budgets of a local authority, but I am concerned about all its budgets. As for the example of the social services budget, many local authorities face considerable pressure on their social services budgets this year. Indeed, the party to which the hon. Member for Harrogate and Knaresborough is affiliated complained just the other day that local authorities were setting their social services budgets so low that voluntary organisations were having to subsidise the cost of elderly people in residential homes. My local authority, which is run in the main by the Liberal Democrats, is one of those authorities, but I shall pass quickly over that matter as
 I can see that it embarrasses him. [Interruption.] It will certainly be in another leaflet.
 I want the Secretary of State for Health to be required to go on the record and say that he is satisfied that the consequences of the Secretary of State for Education and Skill's intervention will not be to make the provision of social services significantly worse. In many cases, that is the hard choice that county councils face when it comes to decisions about budget setting. It would be unfair for one Secretary of State to set out reasons why matters will be wonderful for schools, without other Secretaries of State being required to say—if they think it true—that such matters will be wonderful for elderly people in residential homes. 
 I have also defined the Secretary of State for Transport, Local Government and the Regions as being responsible for other services and I have left a catch-all provision under proposed paragraph (c) because I cannot think of them all. Another important area concerns the Department for Environment, Food and Rural Affairs being the coastal protection authority. In some local authorities, a large amount must be spent—suddenly, in some years—on coastal protection. In the early part of this financial year, two significant cliff falls in my area had significant consequences for the local authority's revenue expenditure. In one case, it required the diversion of an A-class road. 
 I have explained why I tabled the amendment and I hope that the Minister will consider it sensible and in accordance with transparency and joined-up government. I hope that he will support it.

Phil Willis: As an affiliated member of the Liberal Democrats—I do not know whether that is a promotion or a demotion—I look forward to the latest out-of-touch leaflet from the hon. Member for Isle of Wight. I pay tribute to the hon. Gentleman, however, because the kernel of his argument showed that he has spotted a genuine issue that the Minister has not recognised. I referred to it on Second Reading and it concerns the comments that I have made, perhaps too flippantly, about the bypassing of local authorities under the Bill.
 The hon. Gentleman's amendment did not include reference to the Home Secretary's role in the police. Although Mr. Campbell has not briefed me fully, I understand that one major stumbling block in Cabinet was that when the former Secretary of State wanted a ring-fenced budget for education—to take it out of what was the Deputy Prime Minister's Department and run it all from Sanctuary house—the then Home Secretary said that he wanted to do the same for the police. Indeed, other Department heads would be able to say that they needed a ring-fenced budget for their Departments too.

Graham Brady: Can the hon. Gentleman enlighten us on whether the current Home Secretary shares his predecessor's view on the subject?

Phil Willis: I must confess that the current Home Secretary and I do not speak to each other regularly, as our paths have gone different ways, although we
 meet occasionally on the train coming down to London.
 It would be an important change if education budgets were ring-fenced and the Secretary of State had statutory powers to say that if a local authority did not spend what the Government said it should spend, they would determine the budget for it. The hon. Member for West Bromwich, West noted that about 55 to 60 per cent. of a local authority's budget is spent on education. To remove that would leave a huge hole in local authority responsibilities and, if that were then applied to the police, fire and other services, we would have to question the point of having a local authority at all. 
 One Government objective in coming into power was to have joined-up thinking. There was the wonderful recognition by the now Home Secretary that education cannot be treated in isolation from other services. When the hon. Member for Don Valley (Caroline Flint) and I visited the United States, we saw the wonderful work that was going on in North Carolina with the equivalent of sure start. There was wonderful joined-up thinking which recognised that education depends on quality housing, employment and other infrastructures. Once that is stripped apart and Departments compete for ring-fenced budgets, those opportunities are lost. Although I am sure that the amendment is probing—

Chris Grayling: My hon. Friend said that it was not.

Phil Willis: The hon. Gentleman is intelligent enough to know that the amendment is incomplete as it stands. However, he has raised an important issue, and it will be interesting to see how the Minister responds.

Stephen Timms: Local authorities will have the opportunity to object to a minimum budget, if one is set. That is set out in new section 45C(1). If they object, the Bill will also allow them to set out the impact on other services that they run as part of the process, so the amendment would not be necessary to gather information on the impact on other services.
 The hon. Member for Isle of Wight may be concerned about consultation with other Ministers. I can reassure him completely that the Secretary of State for Education and Skills would certainly consult colleagues with an interest in other local services before setting a minimum budget for an authority's schools. The Committee will know that the current Home Secretary is a strong supporter of the measure and worked hard to achieve it. 
 I accept that the topic is a matter for debate and that different people can take different views. The fact that the measure is in the Bill reflects this Government's view that raising standards in education is right at the top of our list of priorities. We need to ensure that the substantial increases in education spending that we will make this year, next year and the year after reach their target and are delivered to schools. Many people will feel that other things are more important and that that priority should not be assigned to education, but it is our clear 
 view that education should be at the top of our list of priorities.

Graham Brady: The Minister says that this shows the priorities that the Government attach to education, which is welcome, although the fact that he has also said that this is a power that he would envisage using extremely infrequently casts some doubt on his claim. Can he give an absolute assurance that there is no possibility that similar powers will be taken in future legislation, during this Parliament by other departmental Ministers, and that there will be no comparable ring fencing for police budgets, transport budgets or other local authority matters?

Stephen Timms: There are no proposals to introduce powers along these lines in any other areas. We would not want to restrict local decision-making abilities further. That reflects the Prime Minister's clear statement before he become Prime Minister that our top three priorities were ''education, education, education''. That is reflected in the clause. The Bill already provides that the Secretary of State must take account of all relevant circumstances before deciding to exercise the power to set a minimum level for the schools budget. There is no doubt that the effect on other services is a relevant consideration. That will certainly need to be taken into account. If there is any doubt about that, I am happy to place that assurance on the record. That may be helpful to the hon. Member for Isle of Wight.

Andrew Turner: The Minister said the Secretary of State would consult other Ministers. He amplified the fact that the views of other Ministers will be relevant in determining the decision that the Secretary of State eventually reaches. He did not say, however, that the Secretary of State would ensure that the views of other Ministers were reported and made clear to the local authority at that time. Is that the case?

Stephen Timms: No, I would not introduce a system whereby the views of many different Ministers would be published. That would be an unusual arrangement. Those concerns would certainly be taken into account, as would the local authority's concerns about the impact on its other services. I hope that the Committee will take the view that the amendment does not help and that the way that the clause currently sets out the proposal is right.

Andrew Turner: I am afraid that the Minister has made it clear that he is not willing for there to be transparency. There may be joined-up government, but it would be under a veil. Frankly joined-up government under a veil is of no help to local authorities going through the difficult process of setting their budgets. Time after time, local authorities are told that there is enough money because the revenue support grant, or whatever, ensures that enough money comes through. That is not widely believed by local authorities.
 If the Secretary of State believes that he is setting a reasonable budget, that is one thing, but convincing the members of the local authority of that is a different matter. Effectively, local authority members escape responsibility. I emphasise that because it is something with which I am terribly familiar in my local authority. 
 The tendency to blame the Government for everything that goes wrong is widespread, but occurs particularly in local authorities led by the party that is not in the habit of being in government. 
 I do not want my local authority or others to be able to say, ''We know that your elderly grandparents are suffering a total lack of domiciliary care and that your elderly parents are being thrown out of residential homes, but it is the fault of the wicked Government. It is not our fault, but theirs.'' 
 We want the Secretary of State for Health to be able to say in public, hand on heart, that there is enough money— 
 It being Seven o'clock, The Chairman proceeded, pursuant to Sessional Order D [28 June 2001] and the Order of the Committee [11, 13 and 18 December 2001], to put forthwith the Question already proposed from the Chair. 
 Amendment negatived. 
 The Chairman then proceeded to put forthwith the Questions necessary to dispose of the business to be concluded at that time.

Stephen O'Brien: On a point of order, Mr. Griffiths. We had the opportunity to discuss clause 40, although we have not concluded our discussions. We have not had the opportunity to discuss clauses 41 and 42, to which amendments have been tabled. It would be logical to be able to vote
 against clauses 41, 42 and even 43, as we have not even considered them. We would like to take those clauses separately, if that is convenient for you.

Win Griffiths: Unfortunately, under the programme resolution, hon. Members cannot vote separately on the clauses that are left. They must be considered under one Question.
 Question put, That clause 40, as amended, and clauses 41 to 43 stand part of the Bill:—
The Committee divided: Ayes 10, Noes 6.

Question accordingly agreed to. 
 Clause 40, as amended, and clauses 41 to 43 ordered to stand part of the Bill. 
 Adjourned accordingly at four minutes past Seven o'clock till Thursday 10 January at half-past Nine o'clock.